Update on Car Loans

Do not borrow money where you buy the car is a rule that I was taught in Australia, however due to promotional offers of 3.9% I let my guard down and paid the penalty for it.

I had to pay a w650,000 application fee to get my low rate loan and I lost w500,000 of discount bringing the real rate I am paying to over 12%, and most of that was paid upfront.

Go to your bank and get an unsecured loan.

If you can't do that because your bank won't cooperate, change banks, but give up on the bank loan because a lot of credit enquiries will reduce your chances of getting the loan.

So if you still need a car, and you don't have the cash then you will have to get dealer finance here are my pointers.

1. You will need your spouse to guarantee your loan.  Korean institutions haven't heard of The UN's Committee on the Elimination of Racial Discrimination's ruling of Habassi v. Denmark so unless you want to take up the fight, your spouse will have to sign.

2.  If you can, choose a smaller town to buy your car, this means that the car dealer and the finance company people will know each other well.  It may take time but if you form a relationship with the dealer, the dealer will take care of every stage where the finance company comes back with a reason not to make the loan.

3.  Be patient, it will take time.

It may have been easier to put it in my wife's name, but as my wife is a homemaker, that wasn't an option either.

Bank Hours may vary on November 10th.

November 10th is the annual university entrance exam.  Usually many companies that start at 9am change the time to 10am to reduce the traffic for students traveling to the exam.

Logging onto HSBC this morning there was an announcement stating branch hours would be 10am to 5pm this Thursday.  I haven't seen anything on any of the other banks websites in English, but it's worth checking, and if you go to the bank early and they're closed, don't panic.

Is it time for the FSS to act on Credit Cards?

Many merchants in Korea are currently protesting about the high merchant fees they have to pay to accept credit cards.  See this Koreatimes story. The government looks like it will do something, but what?


In Australia merchants are allowed to surcharge the customer for paying by card.  In Korea many small merchants do this unofficially by telling the customer they can make a purchase VAT free if they pay by cash.  I do not believe that surcharging is the answer, as many Australian businesses use surcharging as another cash grab Choice Australia survey of retailer surcharging margins. My problem with credit card surcharging is that it discriminates against one type of customer.  As a former business owner I know that handling cash also has costs.  You have your time to count the takings, the insurance for the cash, the time taking it to the bank or the cost of the security card to do that, and finally the risk to yourself and your employees of theft.  I believe that taking cash is more expensive than taking credit cards so that surcharging is not the answer.

The credit card companies could take this opportunity to lower merchant fees and increase annual card fees.  Unfortunately many Korean businesses still measure success on turnover rather than profitability.  There would be pain as a number of Koreans may cancel some of the plastic they hold.  This would probably make the Financial Supervisory Service (FSS) quite happy.  I guess a minimum annual fee of w20,000 would be effective with no fee exemptions.  Of course the credit card companies will never voluntarily do this and it would be a very courageous government that made a law increasing the price of everyone's credit cards.

Another solution would be to ban credit card points schemes.  Why should I be rewarded for not using my money? Removing rewards schemes would allow merchant fees to drop significantly and is also probably the secret dream of every credit card company executive.  But won't the children scream if we lose our candy.  No credit card company will do this, and although there would be some short term pain for the government if they act, I believe it would be quickly forgotten.

Maybe I am being too negative, perhaps the credit card companies can see that they will be facing some frankly draconian regulations if they don't get their house in order, but I doubt they will act without significant government coercion.

Are Korean Credit cards too expensive and too cheap?

Merchants in Korea are being screwed.  Credit cards are very expensive to process here, about twice the cost of Australia and Australia is a lot larger country with far fewer people.  These fees need to fall.

My credit cards are actually too cheap here.  I have 2 visa cards at w5,000 per year of which one of the has the fee waved if you spend more than w1,000,000  a year (less than $1000) and my Diners Club card is w30,000 per year.  All cards include rewards in either discounts or points.  How can these cards be so cheap?  A Diners Club card in Australia costs $135 plus $77 for rewards.  In the USA a Diners Club card costs $75 and in the UK it costs 50 pounds.  Perhaps an increase in fees could reduce the amount of plastic issued in Korea, however who would move first?

Car loans - Watch this space

If you like me are a foreigner in Korea, you may find it very difficult impossible to get a car loan.  We are told we are a flight risk.  We are told our Korean partner must guarantee the loan.

Today I have written to one of the capital companies asking if they were refusing loans based on race.  If they don't answer or give an affirmative answer I will be filing a complaint against them with the National Human Rights Commission next Friday.

It's game on.

A new insurance company is needed.

I missed the boat to give feedback on the Foreigner Financial Supervisory Service recently.  But the other big problem for foreigners living Korea is caused by insurance companies.


I recently heard a story of someone who had been a customer of a major car insurance company for several years and they refused to renew the "blood money" component of his policy because too many foreigners had been making claims.  Since when is it acceptable to make a judgement based on race?


I want to buy a property, I cannot get mortgage insurance because I am foreigner.
I want to buy a car, I cannot get a loan because the insurance company won't insure the loan of a foreigner.
I need a jonsae loan, I cannot get it because the insurance company won't insure a loan for a foreigner.

The common problem is the insurance companies.  The banks are changing but the insurance companies are dragging their feet.

It's time to to form an insurance company for all people who live in Korea, one that won't discriminate on the grounds of race.  One that will allow all Korean residents access to the financial products they need to grow their wealth, protect their families and to help them contribute to this great country in which they choose to live.

The Foreigner Supervisory Service?

The Financial Supervisory Service (FSS) has produced a brochure Ten Helpful Hints for Making Financial Transaction in Korea. 

Let's go through the 10 hints they make:

1. Provide proof of identity when you open a bank account. Okay, but they are saying that Alien Cards will no longer be accepted as proof.  I have mixed feelings about this.  Many people prefer to use their drivers licence as it prevents a lot of you can't you're foreign excuses.  However for those that don't drive, carrying passports around is risky. The fine for losing an Australian Passport is AUD$100 in the first instance plus the cost of a replacement passport is AUD$226.  I don't want to carry my passport outside the house unless it is vital.  The rationale behind this is that an Alien Card cannot be verified, I'm sorry but this is not true.  Verification of Alien Cards happens and is possible under the Telecommunications Act;
2. Designate a correspondent bank for foreign exchange transactions, I have not given up hope that someone will explain the sense of this regulation one day, as it is completely pointless, anti-competitive and discriminatory;
3. Use Internet banking and specialised remittance service, this is a good tip.  Transferring money in branch inefficient and inconvenient;
4. Get a debit card instead of a credit card, getting even a debit card can be difficult and there is a difference, I suggest shopping around for what you want;
5. Enroll in foreign worker insurances and get your insurance money, good hint, but usually employers are the main offenders for not registering for these insurances.  Avoid the independent contractor scam;
6. Take out private insurance for additional coverage, a good hint, but the FSS says that refusing to sell insurance to foreigners who cannot prove Korean language ability is legal.  Yes it makes sense, to a point, but will you deny my Korean wife and daughter the benefits of insurance because I cannot speak Korean?
7. Note that a variable insurance is a dividend-paying policy based on investment performance, say no to these policies. In the words of P.J. O'Rourke complexity beyond a certain point is fraud.  Unfortunately Koreans love this type of policy where you pay your insurance and you get a lump of money in 10-20 years.  I am taking a bath on the policy my wife likes, it's expensive and should anything happen to me it doesn't provide for my wife and daughter.  Luckily I still have some Australian insurance coverage;
8.  Show proof of auto insurance subscription abroad to get discount on Korean auto insurance, great tip; 
9. Apply for an investment registration certificate (IRC) at the FSS to trade Korean listed stocks, more pointless paperwork;
10. Click on online sources of information on Korea’s capital market, see my sidebar.